Made this ________this day of _____________________, 20______, between ______________________________, an Illinois corporation (the "Borrower") and
_______________________________, a national banking association organized under the laws of the United States of America (the "Bank").
WHEREAS, the Borrower has requested the Bank to make loans to the Borrower for business purposes, and the Bank is willing to make such loans on the terms and conditions of this Agreement; NOW, THEREFORE, the parties hereto agree as follows:
# 1. Loans
A. AMOUNT. The Bank agrees, on the terms and conditions of this Agreement, to make loans (hereinafter
called individually a "Loan" and, collectively, "the Loans") to the Borrower in an aggregate principal amount
at any one time outstanding up to but not exceeding One Million Dollars ($1,000,000.00), consisting of a term loan in the amount of Six Hundred Thousand Dollars ($600,000.00) (the "Term Loan") and a line of credit in the maximum amount of Four Hundred Thousand Dollars ($400,000.00) (the "Line of Credit"). Within the limit of the Line of Credit, the Borrower may borrow, repay, and re-borrow at any time or from time to time from the date hereof to and including March 9, 2002, or the termination of the Commitment of the Bank, whichever is earlier; Provided, however, that all sums due under the Line of Credit shall be paid in full during not less than thirty (30) consecutive days annually. The obligation of the Bank to make loans up to but not exceeding such aggregate principal amount at any one time outstanding is hereinafter called its "commitment."
B. NOTICE OF BORROWING. The Borrower shall give the Bank at least three (3) business days' written or
telegraphic notice (effective upon receipt) specifying the amount and date of each request for a borrowing under the Line of Credit.
C. NOTES.(1) The amount of the Term Loan shall be evidenced by a note of the Borrower in substantially the form of Exhibit A hereto, with appropriate insertions (the "Term Note"). (2) The amount of the Line of Credit shall be evidenced by a note of the Borrower in substantially the form of Exhibit B hereto. with appropriate insertions (the "Line Note"). (3) The Line Note and the Term Note are sometimes hereinafter referred to as the "Notes."
# 2. Manner of Borrowing
Upon Bank's approval of a request for an advance hereunder, the Bank shall credit the amount of the advance to the general deposit account of the Borrower with the Bank in immediately available funds. Prior to or concurrently with the execution hereof, the Borrower shall certify to the Bank the officer or officers of the
Borrower authorized to request advances, together with true signatures of such officer or officers, and the Bank may conclusively rely on such certification until it shall receive notice in writing to the contrary.
# 3. Conditions of Lending
A. INITIAL LOAN. The obligation of the Bank to make the initial Loan to be made by it hereunder is subject to
the following conditions precedent: (1) The Bank shall have received a certified copy of all corporate action taken by the Borrower to authorize the execution, delivery, and performance of this Agreement and the Notes and the borrowing by it hereunder, and such other papers as the Bank shall reasonably require. (2) The Bank shall have received an opinion of counsel to the Borrower, in form and substance satisfactory to the Bank and to Midwest Lawyers, Inc., counsel to the Bank, as to the matters referred to in # 5A, 5B, and 5D hereof, and furtherto the effect that (a) this Agreement has been duly authorized, executed, and delivered and is a legal, valid, binding, and enforceable agreement of the Borrower and (b) the Notes, upon execution and delivery in accordance with the provisions of this Agreement, will be legal, valid, and binding obligations of the Borrower enforceable in accordance with their respective terms. (3) The Borrower shall have granted to the Bank a first security interest in its equipment, fixtures, inventory, accounts, and general intangibles. (4) The Bank shall have received from John Any and Samuel Some, guaranties in the Bank's usual form of all obligations of the Borrower to the Bank.
B. EACH LOAN. The obligation of the Bank to make each Loan to be made by it hereunder (including the initial Loan) is subject to the following conditions precedent: (1) All of the conditions in # 3A hereof remain satisfied; all instruments and agreements referred to in # 3A hereof remain in full force and effect. (2) No event of default specified in # 6 hereof. and no event that with notice or lapse of time or both would become such an event of default, shall have occurred and be continuing; the representations of the Borrower in # 5 hereof shall be true on and as of the date of the making of such Loan with the same force and effect as if made on and as of such date, and the Borrower shall so certify to the Bank. (3) All legal matters incident to the transactions hereby contemplated shall be satisfactory to the Bank. . (4) The Bank is the principal bank of account of the Borrower.
# 4. Covenants
So long as the commitment of the Bank shall be outstanding and until the payment in full of all Notes outstanding hereunder and the performance of all other obligations of the Borrower hereunder, the Borrower agrees that, unless the Bank shall otherwise consent in writing: A. FURNISH FINANCIAL STATEMENTS. The Borrower will furnish the Bank: (1) within one hundred five (105) days after the end of each fiscal year of the Borrower, copies of balance sheets of the Borrower, including any subsidiaries, as at the close of such fiscal year and statements of income and retained earnings of the Borrower and its subsidiaries for such year, reviewed by independent certified public accountants selected by the Borrower and satisfactory to the Bank; and (2) within thirty (30) days after the end of the first half of each fiscal year of the Borrower, copies of
balance sheets of the Borrower and its subsidiaries as at the end of such six-month period and statements of income and retained earnings of the Borrower and its subsidiaries for such six-month period, in each case prepared by such accountants; and 3) within thirty (30) days after the end of each of the first three quarters of each fiscal year of the Borrower, copies of balance sheets of the Borrower and its subsidiaries as at the end of such quarter and statements of income and retained earnings of the Borrower and its subsidiaries for the period from the beginning of the fiscal year to the end of such quarter, in each case certified by an authorized financial or accounting officer of the Borrower; and (4) within ten (10) days after the end of each calendar month, an aged analysis of all accounts receivable of the Borrower, with such supporting data as Bank may reasonably require; and (5) within ninety (90) days after the end of each calendar year, current personal financial statements of all individual guarantors of the Borrower's obligations to the Bank; and (6) within one hundred five (105) days after the end of each fiscal year of the Borrower, a certificate of such independent public accountants, and within thirty (30) days after the end of each of the first three quarters of each fiscal year of the Borrower a certificate of an authorized financial officer of the Borrower, in each case as to whether any event of default specified in # 6 or any event that under # 6 with the lapse of time or the notice and lapse of time specified therein would become an event of default has occurred and is continuing; and (7) from time to time, such further information regarding the business, affairs, and financial condition of the Borrower and its subsidiaries as the Bank may reasonably request.
All financial statements delivered hereunder shall be prepared on the basis of generally accepted accounting
principles and practices applied on a basis consistent with those used in the preparation of the audited financial statements of the Borrower referred to in # 5C hereof.
B. WORKING CAPITAL. The Borrower will at all times maintain current assets of the Borrower and its
subsidiaries in excess of their consolidated current liabilities by at least Two Hundred Thousand Dollars
($200,000.00) and will at all times maintain a current ratio of current assets of the Borrower and its subsidiaries to their current liabilities of not less than, 1 (one) to 1 (one). For purposes of this paragraph the Notes Shall be included in current liabilities.
C. CURRENT ASSETS. The Borrower will not at any time permit the total liabilities of the Borrower and its
subsidiaries to exceed current assets of the Borrower and its subsidiaries by an amount in excess of Fifty Thousand Dollars ($50,000.00). For purposes of this paragraph the Notes shall be included in total liabilities.
D. TANGIBLE NET WORTH. The Borrower will not at any time permit the ratio of the total liabilities of the
Borrower and its subsidiaries to the Tangible Net Worth of the Borrower and its subsidiaries to exceed 3 (three) to 1 (one). The Borrower shall at all times maintain its Tangible Net Worth in an amount not less than Ten Million Dollars ($10.000,000,00). For purposes of this paragraph the Notes shall be included in total liabilities and deferred expenses of the Borrower and its subsidiaries shall be treated as intangibles.
E. LIENS, ETC. The Borrower will not, nor will it permit any subsidiary to, create, incur, or suffer any
lien, mortgage, pledge, assignment, or other encumbrance on, or security interest in, any of its properties,
assets, or receivables, now owned or hereafter acquired, securing any indebtedness or obligation (all such security being herein called "liens"), except: (1) liens to Bank; (2) materialmen's, suppliers', tax, and other like liens arising in the ordinary course of business and securing
obligations that are not overdue or are being contested in good faith by appropriate proceedings; (3) liens or retained title of vendors to the Borrower or any subsidiary on property now owned, hereafter acquire, or existing on such property at the time of acquisition thereof and securing indebtedness permitted by # 4F(4) of this Agreement, provided that the principal amount of indebtedness secured by each such lien does not exceed eighty percent (80%) of the purchase price or of the fair market value of such property, whichever is less, and further provided that any lien permitted by this clause does not extend to any other property of the Borrower or any of its subsidiaries; and (4) other liens on property, assets, or receivables of the Borrower or any of its subsidiaries having an aggregate value that shall not exceed One Hundred Thousand Dollars ($100,000.00) (computed at book or fair market value, whichever is lower) securing any indebtedness permitted by #s 4F(2), (3), and (5).
F. LIMITATION ON INDEBTEDNESS. The Borrower shall not, and shall not permit any subsidiary to, have any indebtedness except for: (1) indebtedness incurred under this Agreement; (2) current accounts payable or accrued incurred by the Borrower or any subsidiary in the ordinary course of its business, provided that the same shall be paid when due in accordance with customary trade terms unless contested in good faith by appropriate proceedings; (3) short-term indebtedness of the Borrower for money borrowed from banks up to but not exceeding One Hundred Thousand Dollars ($100,000.00) in aggregate principal amount at any one time outstanding; provided. however, that the Borrower shall be free from all such short-term indebtedness in excess of Thirty Thousand Dollars ($30,000.00) for at least sixty (60) consecutive days in each fiscal year of the Borrower; (4) purchase money indebtedness to vendors of property to the Borrower or any subsidiary, which indebtedness shall not exceed Twenty Thousand Dollars ($20,000.00) in aggregate principal amount at any one time outstanding; and (5) other indebtedness of the Borrower and its subsidiaries up to but not exceeding One Million Dollars
($1,000,000.00) in aggregate principal amount at any one time outstanding, which may include, without limitation, guaranties and other contingent obligations with respect to persons, firms, or corporations other than subsidiaries not exceeding Two Hundred Thousand Dollars ($200,000.00) in aggregate amount at any one time.
G. TAXES, ETC. All taxes, levies, and assessments of whatever description will be paid before interest or
penalties accrue thereon.
H. DIVIDENDS. The Borrower will not, after the date hereof, declare any dividends or authorize any other
distribution on any stock of the Borrower, whether now or hereafter outstanding, or make any payment on account of the purchase. acquisition, redemption, or other retirement of any shares of such stock, without the prior written authorization of the Bank.
I. REORGANIZATIONS, ACQUISITIONS, CHANGE OF NAME. The Borrower will not, and will not permit any subsidiary to, (1) merge or consolidate with or into any corporation. or sell, lease, transfer, or otherwise dispose of all or any substantial part of Its assets (except in the ordinary course of business), whether now owned or hereafter acquired; or (2) changed its corporate name, except with the prior written authorization of the Bank.
J. MANAGEMENT; OWNERSHIP. The Borrower will not and will not permit any subsidiary to, make any significant change in its management without a minimum thirty (30) days' prior written notification to the Bank. The Borrower will not permit a transfer of its capital or other voting stock to others than the present holders thereof.
K. LEASES. The Borrower will not, and will not permit any subsidiary to, create, incur, assume, or suffer to
exist any lease obligation other than lease obligations incurred in the ordinary course of business of the
Borrower and its subsidiaries.
L. INSURANCE. The Borrower shall, and shall cause each of its subsidiaries to, maintain insurance in
responsible companies in such amounts and against such risks as is satisfactory to the Bank.
M. CONDUCT OF BUSINESS. The Borrower will not (1) purchase or acquire obligations owed by others, or (2) make capital expenditures by lease, purchase, or otherwise, greater than the prior year's depreciation. .
# 5. Representations
The Borrower hereby represents to the Bank that:
A. CORPORATE EXISTENCE AND POWER. The Borrower is a corporation duly incorporated, validly existing, and in good standing under the laws of the State of Illinois and is duly qualified to transact business or own real property in each state or other jurisdiction in which its principal real properties are located or in which it conducts any important or material part of its business; and the Borrower has corporate power to make this Agreement and to borrow hereunder.
B. CORPORATE AUTHORITY. The making and performance by the Borrower of this Agreement and the Notes have been duly authorized by all necessary corporate action and will not violate any provision of law or of its charter or bylaws, or result in the breach of or constitute a default or require any consent under, or result in the creation of any lien, charge. or encumbrance upon any property or assets of the Borrower pursuant to, any indenture or other agreement or instrument to which the Borrower is a party or by which the Borrower or its property may be bound or affected, other than as specifically provided herein.
C. FINANCIAL CONDITION. The balance sheets and statements of income and retained earnings of the Borrower and its subsidiaries, heretofore furnished to the Bank, are complete and correct and fairly represent the financial condition of the Borrower and its subsidiaries as at the dates of said financial statements and the
results of their operations for the periods ending on said dates. Neither the Borrower nor any of its subsidiaries has any material contingent obligations, liabilities for taxes, long-term leases, or unusual forward or long-term commitments not disclosed by, or reserved against in, said balance sheets or the notes thereto; and at the present time there are no material unrealized or anticipated losses from any unfavorable commitments of the Borrower or any subsidiary. Said financial statements were prepared in accordance with generally accepted principles and practices of accounting consistently maintained throughout the periods involved. Since the date of the latest of such statements there has been no material adverse change in the financial condition of the Borrower and its subsidiaries from that set forth in said balance sheets as at that date.
D. LITIGATION. There are no suits or proceedings pending, or to the knowledge of the Borrower threatened, against or affecting the Borrower or any of its subsidiaries that, if adversely determined, would have a material adverse effect on the financial condition or business of the Borrower and its subsidiaries; and there are no proceedings by or before any governmental commission, hoard, bureau. or other administrative agency pending or, to the knowledge of the borrower, threatened, against the Borrower or any of its subsidiaries.
# 6. Defaults
If any of the following events of default shall occur and shall not have been remedied:
A. Any representation or warranty made by the Borrower in this Agreement or in any request or certificate of the Borrower furnished to the Bank hereunder shall prove to have been incorrect in any material respect; or
B. The Borrower shall default in the payment, when due, of any principal of or interest on the Loans or the Notes or any other sum payable by the Borrower under this Agreement; or
C. The Borrower shall default in the performance of any other obligation to be performed by it contained herein; or
D. Any indebtedness for money borrowed, for which the Borrower or any subsidiary or any guarantor of the Borrower's obligations to the Bank is liable, as principal obligor, guarantor, or otherwise, is not paid at its stated maturity or is declared or otherwise becomes due and payable prior to its stated maturity; or
E. Any event of default as defined in any loan or similar agreement to which the Borrower, any subsidiary or any such guarantor is now or hereafter a party, or any other event thereunder or upon the occurrence of which any holder or holders of indebtedness outstanding thereunder may declare the same due and payable, shall occur and shall continue for more than the period of grace, if any, provided therein; or
F. Any such guarantor shall terminate or revoke his, her, or its guaranty or shall take any action to terminate or revoke same; or
G. The Borrower or any of its subsidiaries or any such guarantor shall (1) terminate or suspend the operation of any portion of his, her, or its business as presently conducted; (2) apply for or consent to the appointment of a receiver, trustee, or liquidator of himself, herself, or itself, or of all or a substantial part of his, her, or its assets; (3) be unable, or admit in writing his, her, or its inability to pay his, her, or its debts as they fall due; (4) make a general assignment for the benefit of his, her, or its creditors; (5) be adjudicated a bankrupt or insolvent; or (6) file a voluntary petition in bankruptcy or a petition or an answer seeking reorganization or an arrangement with creditors or to take advantage of any insolvency law or an answer admitting the material allegations of a petition filed against him, her, or it in any bankruptcy, reorganization, or insolvency proceeding, or any action shall be taken by it for the purpose of effecting any of the foregoing; or
H. An order, judgment, or decree shall be entered, without the application, approval, or consent of the Borrower or any of its subsidiaries or any such guarantor by any court of competent jurisdiction, approving a petition seeking reorganization of the Borrower or any such subsidiary or guarantor or appointing a receiver, trustee, or liquidator of the Borrower or any such subsidiary or any such guarantor or of all or a substantial part of any of their respective assets; or
I. The Borrower shall in any material respect fail to comply with any statute, rule, regulation, ordinance, order, or other law or judicial decree regarding the Borrower or its premises or assets; or
J. The Bank shall believe that the prospect of payment of the Loans or the performance of any of the Borrower's obligations under this or any other agreement with the Bank is impaired; then, and in any such case, the Bank may declare the principal of and interest accrued on the Term Note to be forthwith due and payable, whereupon the same shall become forthwith due and payable and/or the Bank may (i) immediately terminate its commitment hereunder and/or (ii) declare the principal of and interest accrued on all of the Line Note to be forthwith due and payable, whereupon the same shall become forthwith due and payable.
# 7. Notices
All notices, requests, and demands shall be in writing and be given to or made upon the respective parties hereto as follows:
The Borrower: ____________________
The Bank: _____________________
or to such other address as either party shall designate for itself in writing to the other party.
# 8. Miscellaneous
A. Except as otherwise expressly stated herein, all computations required hereunder shall be made by the application of generally accepted accounting principles and practices applied on a basis consistent with those used in the preparation of the audited financial statements referred to in # 5C.
B. As used herein: (1) "Subsidiary" of the Borrower or any person means any corporation of which the Borrower or such person directly or indirectly owns or controls at the time (i) at least a majority of the outstanding stock having under ordinary circumstances (not dependent upon the happening of a contingency) voting power to elect a majority of the board of directors (in the case of a corporation having directors) or (ii) a majority of the voting stock of any corporation not having directors. (2) "Indebtedness" shall mean and include ail items that in accordance with generally accepted accounting principles would be included in determining total liabilities as shown on the liability side of a balance sheet as at the date as of which debt is to be determined, but in any event including, without limitation, guaranties, endorsements (other than endorsements for collection or deposit in the ordinary course of business), and other contingent obligations in respect of, or to purchase or otherwise acquire or advance funds on account of or otherwise service, obligations of others. (3) "Tangible Net Worth" shall mean, as to the Borrower and its subsidiaries, the result of subtracting from the aggregate of the issued share capital, surplus, reserves, and retained earnings account on a balance sheet of the Borrower and its subsidiaries, any capitalized leaseholds; any share capital discount and expense; any unamortized discount and expense on indebtedness of the Borrower and its subsidiaries; any write-up of assets; any excess of cost over market value of investments; any development, pre-operating. preproduction, and start-up expenses; goodwill; and any other intangible assets to the extent included in such balance sheet of the Borrower and its subsidiaries.
(4) "Short-term indebtedness" shall mean indebtedness for borrowed money payable on demand or less than one (1) year after the date of the creation thereof.
(5) "Long-term financing" shall mean indebtedness for money borrowed other than short-term indebtedness.
C. Neither failure nor delay on the part of the Bank to exercise any right, power, or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power, or privilege.
D. This Agreement and the Notes shall be deemed to be contracts made under the laws of the State of ____________________ and for all purposes shall be governed by the laws of that State.
E. The Borrower will pay, whether or not any Loan is made hereunder, (i) all out-of-pocket expenses of the Bank in connection with the preparation, execution, and delivery hereof and of the Notes and the making of Loans hereunder, including reasonable fees and disbursements of counsel to the Bank; (ii) all costs of collection (including reasonable counsel fees) in case default is made in the payment of any Note; and (iii) all reasonable expenses (including reasonable counsel fees) incident to the enforcement of payment of any obligations of the Borrower by any action or participation in, or in connection with, a case or proceeding under Chapter 7. 11, 12, or 13 of the Bankruptcy Code, or any successor statute thereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, all as of the day and year first above written.
(signatures)
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